France’s energy import bill tripled in three years 2019 - 2022

Investment Analysis Clubs Macro Economic Trends and Risks
1

France’s customs authorities published a report on “France’s energy vulnerability” on Friday (6 October), which coincided with the publication of the main results of France’s foreign trade in 2022.

The report is clear: “Soaring energy bills have […] once again highlighted the dependence and vulnerability of European economies on energy imports,” it said about 2022, the year Russia launched its military aggression in Ukraine.

France is entirely import-dependent on gas and almost wholly dependent on coal and oil, which constitutes “a factor of vulnerability for the country,” the report notes.

Although the amount of energy measured in Terawatt-hours (TWh) has fallen by around 5%, the import bill has risen from €58 billion in 2019 to €148 billion in 2022, a 2.5-fold increase.

Meanwhile, France’s net energy bill has risen from €44 billion in 2019 to €116 billion in 2022, according to figures published by the Energy Transition Ministry on 28 September.

Gas

Specifically, the customs report notes an “unprecedented increase” in the value of gas supplies, which rose from €11 billion in 2019 to €52 billion in 2022. In net terms, France’s gas bill jumped from €8 billion to €46 billion over the period.

These figures result from rising imports from countries other than Russia, whose gas was abundant and cheap before the war in Ukraine.

France remains highly dependent on imports regarding oil (98%) and gas (99%). This is also the case for the European Union, but to a lesser extent.

2

To meet its EU targets, France will need to triple its use of renewable power and reduce its energy consumption by a third by 2035, France’s electricity grid operator RTE said in its 2030-2035 energy outlook.

On Wednesday, RTE updated its scenarios for France’s energy situation up to 2030 and 2035, taking into account the impact of the war in Ukraine on France’s and the EU’s green transition.

The new assessment is also in line with the latest projections for decarbonised energy production presented last week by French Energy Transition Minister Agnès Pannier-Runacher.

These are “very ambitious but achievable” targets, said Xavier Piechaczyk, chairman of RTE’s board of directors, commenting on the grid operator’s scenarios which aim to meet the EU’s target of reducing net greenhouse gas emissions by 55% below 1990 levels by 2030.

For 2030, RTE is calling for energy consumption to be reduced by around 20% by 2030 (1,300 TWh) and by about 30% by 2035 (1,100 TWh) compared with 2022 (1,600 TWh).

To meet this target and decarbonise its energy mix, France will need to electrify its fleet and produce 640 to 700 TWh of decarbonised electricity by 2035, compared to 395 TWh today, according to RTE.

Renewables are expected to play a dominant role, with RTE aiming for a target of 270 to 320 TWh by 2035, compared to 120 TWh today.

In the best-case scenario, RTE expects 110 TWh of solar power by 2035, 85 TWh of onshore wind power and 65 TWh of offshore wind power by 2035.

Compared to current capacity, the installation rate should match that of Germany for solar PV, keep pace with Spain for onshore wind and match the UK for offshore wind.

3

Barron’s Roundtable on Fox Business this week had segment that green energy stocks are having a bad year. They depend on borrowed money and are hurt by rising interest rates. Not to mention supply chain issues and rising labor and shipping costs. France and Europe find themselves behind the 8 ball on this one. They should have done more when rates were low. Now it will be more costly because of the energy problems you mention.

Nuclear power in France should be mentioned. They have many plants. Have maintenace issues. Will they recover? Will they build more?

4

Be interesting to see if they would be willing to try the experimental NuScale SMR that was recently cancelled in the US. Key point would be to test it and then see how it did. May be quicker/easier to site and build a series of SMRs rather than the historically large nuclear power plants.

1 Like
5

France is a net exporter of electricity. So far this year, France has exported a net 41.7 Terawatt-hours. This is approximately equal to the full-time output of six of its 900 MW class PWR nuclear plant. Some of the nukes underwent maintenance and inspections in 2021 and 2022, but many of those plants have returned to service. Below is the current energy mix of the electricity sector.

France, power generation, 2023 (so far)
Nuclear  269.2 TWh (67.6%)
Hydro     41.2 (10.3%)
Wind      38.4  (9.6%)
Nat. Gas  23.1  (5.8%)
Solar     20.3  (5.1%)
Biomass    2.8  (0.7%)
Other      3.1  (0.8%)

The “Other” category includes coal, petroleum and waste, and each are fairly small. Natural gas generation is almost 6% of the total, and I suspect much of that gas is imported. The vast majority of petroleum products burned in France are for transportation fuels, plus possibly some home and industry heating from natural gas, for instance. They do have a rather large electrified rail system in the country, so that is essentially nuclear powered.

The percentage of clean electricity is better than 93%, and as previously stated, the country exports a significant amount of power to its neighbors.

^ ^ ^ ^ ^ ^ ^ ^ ^

EDF has its own SMR design, currently going through the regulatory processes for approval.

President Macron has been an advocate for new nuclear power.

However, Europe has its own monetary inflation problems, which creates problems for building new power plants, whether they are nuclear, wind, or something else.

  • Pete
3 Likes
6

Below is a link showing the retail electricity prices paid by households in the EU.

Below are the 6 most expensive countries for electricity, for the first half of 2023.

1 Netherlands  47.5 euro cents/kwh
2 Belgium      43.5 cents
3 Romania      42.0
4 Germany      41.25
5 Denmark      38.11
6 Italy        37.82

Netherlands at the top is curious. Historically, the Netherlands has usually had rather low priced electricity. Germany and Denmark have usually been at the top of the list, but they are now down to #4 and #5. FYI, the price in France is 23.17 cents per kwh, coming in at #17 on the list. The EU average is 28.9 cents, so France’s (mostly) nuclear powered electricity is comparatively less expensive than most of the EU.

  • Pete
1 Like
7

Retail prices = whole sale prices + taxes + transmission/distributional + engineering/management.

Germany adds more taxes than France.

The annual wholesale price of electricity in France and Germany is not very different.

8

France is big importer of gas and oil. Over 98% of gas and oil is imported.

Green House Gas emissions 2020, 2021, 2022 in Mton
France:
405.72, 442.59, 430.36 increase of ~ 25 Mton
Germany:
751.34, 792.45, 784.00 increase of ~ 23 Mton